Macquarie to acquire Wheelabrator Technologies, IPO plans cancelled
- Energy Capital Partners (ECP) has entered a definitive agreement to sell Wheelabrator Technologies to Macquarie Infrastructure Partners (MIP), which operates within the Macquarie Group, for an undisclosed sum. Wheelabrator confirmed to Waste Dive that prior plans for an IPO have been cancelled as a result.
- "Over the last few years under ECP's ownership, we have enhanced our core business here in the United States and further developed on our strong pipeline of additional waste-to-energy projects in the United Kingdom. We are confident that the long term support from MIP will allow Wheelabrator to continue to operate as a trusted and reliable partner for its customers and continue to execute on our growth agenda," said President & CEO Robert Boucher in a statement.
- The deal is expected to close in Q1 of 2019 pending regulatory approval from the Federal Energy Regulatory Commission, Committee on Foreign Investment in the United States, Federal Communications Commission and New Jersey Department of Environmental Protection, among other conditions.
The company has been taking a more public-facing stance in recent months, including a July announcement of IPO plans and a large booth at WASTECON in August. At the time, any IPO announcement was said to still be months away. Now, Wheelabrator said it was working to finalize the S-1 for a public filing with the SEC when ECP entered into the Macquarie deal.
Wheelabrator touts itself as the pioneer of WTE in the U.S., with an initial Massachusetts facility in 1975, and is the second-largest WTE operator in the U.S. market. The company also has a growing presence in the U.K. for a combined annual processing capacity of more than eight million tons and electricity output of 782 MW. This deal will include all 26 of the company's assets — including 19 WTE facilities, three power plants and four ash monofills.
Three of those WTE facilities are currently under construction in the U.K., where Wheelabrator, Covanta and others have seen new potential for growth in recent years. All of them are also slated to open in 2019, making this deal potentially more appealing to MIP.
However, this deal could also come with some level of potential expense. Wheelabrator recently announced plans to close a Florida facility, leaving its fate unclear. The company also continues to face community tension around facilities in Maryland, Massachusetts and elsewhere, which may lead to new capital costs in the future.
As energy prices remain low, the U.S. WTE market has also become tougher to operate in without prioritizing new revenue streams from special waste, metals recovery or other areas. Covanta, the only publicly-traded U.S. WTE company, continues to adapt its own business model and is considering some facility closures as a result.
These financial realities were seen as one reason why Waste Management sold Wheelabrator to ECP for $1.94 billion in 2014. Though given a Macquarie unit's recent partnership with Covanta on European projects it's clear the firm still sees strong potential in waste-to-energy.
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